SUMMARY:
- Predictions of more carnage as a result of debt woes fail to materialize.
- Terrible GDP data turns the market lower, but again, no freefall.
- Dollar, bonds, gold and oil react as expected to very bad economic data.
- Chicago PMI hangs on to expansion.
- Michigan sentiment flat and still quite subpar.
- Okay, why is the market holding in the range? Anticipated liquidity gratis the Fed.
- President calls our system not worthy of an AAA rating. Oh really? Versus what?
- SP500, SP600 tap the 200 day SMA and rebound. No reversal, but important action.
- Moody’s now saying no immediate downgrade coming.
- Maybe some short covering brought the indices back, but the stock market is poised for a ‘deal’ this week, and a little bit of help from the Fed.
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SUMMARY:
- Relief bounce to the Wednesday selling fails to hold.
- Jobless claims end the streak at 15 weeks, provide the market some cheer, but in the end it was not enough.
- June Pending home sales rise but the cancellations are running at 4x the norm.
- Container ships show a further slowdown in progress.
- Friday Q2 GDP report may top expectations on inventories piling up, but that is not how you want to make your gains.
- Still in a trading range no matter how you slice it. We just would like for it to hold.
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As a matter of principle, I do not spend much time thinking about politics. I don’t listen to the radio shows (you know the ones). I don’t spend any time at all on sites such as POLITICO, the Drudge Report, etc. And I don’t squander time talking to friends, colleagues, and/or family about the goings on in Washington. To clarify, I am not an apathetic voter; I simply don’t spend much energy on the game of politics. And from a professional standpoint, I’m of the opinion that my job is to identify what IS going on in the markets, and avoid any discussion of what I believe OUGHT to be happening – either on Wall Street or in Washington.
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SUMMARY:
- Pundits pick from the reasons causing the selling as the market falls back in its trading range.
- Financial station misdirection: Gold sold because of a possible budget deal. Stocks sold because no possible budget deal. Any wonder why there is confusion out there?
- Durable Goods Orders flop, business purchases as well.
- Fed Beige Book a picture of growing weakness.
- Real reason for selling: pathetically weak economic data and a strong technical pattern.
- What does Wednesday, despite all the hyperbole show? The stock market is, after all the talk, still in a trading range.
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Up until yesterday afternoon, I had been pleasantly surprised as to how well the major indices had held up under the incessantly negative headlines and all the talk about default, deficits, downgrades, and doom. However, as expected, the bears finally found their mojo Wednesday as the dithering in Washington gave even those confident in the idea that the politicians wouldn’t muck this up a reason for concern. So, with no buyers and lots of reason to be fearful, the glass-is-half-empty crowd had a field day.
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SUMMARY:
- Stocks recover from a softer start, but a veto threat helps them ease over for a second loss for the week.
- Earnings decidedly mixed as many opt to use DC uncertainty as a hedge on guidance.
- Case/Shiller Index still shows no relief.
- Richmond PMI flips back to negative.
- New Home Sales decline when expected to grow.
- Consumer Confidence is up . . . to still recessionary levels.
- Indices fade back toward near support, still, after all, in the range.
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Perhaps the most interesting aspect to the current market isn’t necessarily the three-ring circus that is currently playing in Washington or the never ending stream of difficulties across the pond. No, the thing that strikes me the most regarding the action in the stock market is the refusal of traders to embrace the dark side of the debate at the present time.
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SUMMARY:
- No deal on the debt/deficit, no market collapse either.
- Moody’s downgrades Greece again, predicts default.
- SP500, NASDAQ still at the February highs, trying to keep the bounce moving.
- Earnings are the main driver (despite the budget issues), and they were what you would call mixed after hours.
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Perhaps I should consider wandering off on another vacation soon because in short, if you liked Monday, you’re probably going to love the rest of the week. While I have taken an oath to never, ever drag the dusty crystal ball up from the crawl space under the house, I am of the mind that there isn’t likely to be much in the way of upside action until the two parties in Washington come to an agreement. And with Senator Corker today making it clear that the August 2nd deadline isn’t really a deadline, well, I guess we’re stuck playing the waiting game for a while.
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First there was the self-imposed July 22nd deadline for the leaders in Congress to come up with a plan to deal with the debt ceiling and budget deficit. The thinking was that Congress needed some time in order to get the necessary legislative procedures done before the deadline arrived. Then House Speaker Boehner and Treasury Secretary Geithner made headlines on the Sunday morning news shows with the pronouncement that a deal needed to be reached before the foreign markets opened that evening. However, both deadlines have now come and gone, leaving investors around the globe wondering (a) if there actually is a deadline, (b) if the parties will bother to find a solution in time, and (c) if we are witnessing another TARP vote moment.
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SUMMARY:
- After lagging, tech and chips take the lead as the rally continues, at least for techs, energy, and other leaders.
- Earnings are mixed, no positives on Europe or the budget deal (no negatives either), so the leaders continue higher.
- The issue that won’t die: big companies don’t hire because they cannot do that and maintain profits growth.
- Monday blues once more? Indices approaching the top of the range, but the leaders, and some new additions, are running nicely.
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SUMMARY:
- Ask and ye shall receive: market provides a bit of follow through.
- EU visits Greece once more with loads of money.
- Jobless claims rise yet again, still well over 400K per week
- Leading Economic Indicators rise, matching expectations, but revisions dog prior gains.
- Companies have a lot of money but the Administration complaining about it and threatening companies won’t get them to spend it. Bring forth the right policies and they will . . . and the economy will follow.
- Decent earnings but economic data remains very weak. Why is market racing toward the prior highs? Could it be QE3?
- Riding the rebound, letting positions run, but don’t forget it is still inside a trading range.
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Although those of us in the money management game tend to review a myriad of indicators, read everything in sight, and spend an inordinate amount of time pouring over charts and economic statistics in order to help us keep our finger on the pulse of the market, there are times when things can be just plain simple. For example, the stock market currently seems to be fully engaged in a game of “deal or no deal?”
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SUMMARY:
- Market struggles after more strong earnings, begging the question is all the good news built in for now?
- June Existing home sales put 2011 on track for the worst year in housing since the worst year in housing.
- Another last minute bill is in the works, ready to be rammed through with no one knowing what it says, what it means, or what it does.
- Stocks already looking for another reason to keep the mid-range bounce going.
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It is said that the stock market discounts what is likely to happen over the next three to six months. While I firmly agree with this concept, we should also note that the time-frame being discounted in the current environment is obviously much shorter than that as each headline is met with an almost instantaneous response in the markets. So, with no game-changing news to work with and an awful lot of inputs on the horizon, we’re of the mind that Wednesday’s rather blasé day was a result of traders waiting and watching for what comes next on a number of fronts.
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SUMMARY:
- Monday’s worries gone with the wind of strong earnings guidance and a potential budget deal thrown in.
- IBM a company making it happen. Bailed out banks making losses.
- Housing starts jump in June. What the heck are we supposed to do with them?
- Wynn and wet blankets
- Market wants to rally from mid-range and AAPL will help it continue at least through Wednesday morning.
- Higher low in the range can mean a breakout. Just doesn’t guarantee one.
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I don’t know about you, but I have had a hard time staying calm lately whenever the subject of the political wrangling over the debt ceiling in Washington has come up. In short, I find the finger-pointing, the name-calling, and all the he-said-she-said bickering on both sides of the aisle infuriating. My problem isn’t about which side is right or wrong, but rather the staunch righteousness each party displays and the out-of-hand dismissals of anything and everything that might come from across the aisle – especially when the fate of the economy is on the line.
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SUMMARY:
- Same old debt issues once again start the trading week lower.
- Geithner attacks the banks, correctly stating their interests are not aligned with the economy, but who insured that was the case?
- GS lowers its economic outlook through 2012
- USA Today cuts to the chase, says our debt is $62T
- AAPL holds up NASDAQ ahead of IBM big earnings. Can the pullback and some good earnings provide the impetus to overcome the downside momentum.
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Stocks finished lower again on Monday as traders around the globe failed to bite on the idea that the European stress test results were a reason for celebration. It was obvious from the wee hours here in the states that fears of contagion and the potential for a replay of the global credit crisis was driving the action. And although the bulls did manage to find a few friends near the end of the day, another drop of 95 Dow points can hardly be described as a moral victory.
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Although stocks did finally manage to hold onto a gain on Friday, it felt more than a little artificial as the tug of war between the macro issues such as sovereign debt in Europe and the debt ceiling here in the U.S., and the micro picture involving earnings from individual companies continued to hold sway for much of the session. In short, solid earnings from early reporters such as Citi (C), JPMorgan (JPM), and Google (GOOG) have been all but ignored by the major indices as traders appear to be focusing all of their energies on the macro view, all of the time.
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SUMMARY:
- Investors look past economic data, US and Europe debt issues toward earnings and, yes, QE3, bouncing stocks to close the week.
- GOOG earnings, M&A offset Friday economic data
- New York PMI contracts for the second consecutive month.
- Production and capacity disappoint again.
- Michigan Sentiment dives, following consumer confidence.
- Bernanke, Congress talk of avoiding becoming ‘another Japan.’ Sorry but we ARE Japan.
- Administration bedeviled by the lack of hiring by the companies it gave billions to. Did I say this was the 1970′s all over again?
- Not convinced the market can bounce from mid-range support, but there is a pullback ahead of earnings, and if the leaders that are holding up rally, the indices will follow.
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SUMMARY:
- Wednesday Bernanke’s QE3 comments sparked an upside move while Thursday they choked off an upside move.
- Jobless claims decline but still over 400K.
- June Retail sales post improvement.
- PPI falls . . . outside the core that is.
- Another rally fails but NASDAQ and SOX are at support and leaders are still set up nicely.
- GOOG trying to spark up an earnings rally on expiration.
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During times of uncertainty in the market, the major indices have a tendency to seek an equilibrium point between hope and fear. With so many big, bad events on the horizon, it appears that this is what is occurring at the present time. Yes, it is true that the market has either been down or acted badly for five straight sessions on the back of bad news and the fear of what could happen. And yes, the “action” has to be considered negative, which, if you are a tape watcher, means that there is likely to be more red numbers to come.
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SUMMARY:
- Bernanke QE3 comments help spur an early bounce off support, but stocks have a hard time keeping it up.
- China GDP lower but tops expectations, aiding the market bounce as some say no hard landing for China. Really?
- ‘Transitory’ slow patch? Some of Bernanke’s henchmen have their own term for it and we have ours.
- Moody’s downgrade watch is its next step to blackmail Congress.
- Intraday reversal off the highs is disappointing for the upside, but leaders are still holding their near support.
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Stocks started off strong on Wednesday on the back of a batch of decent data out of China and then really got moving to the upside when traders saw that Ben Bernanke had put the possibility of more quantitative easing in black and white. However, the good mood didn’t last too terribly long as the Fed’s Richard Fisher was quick to point out after lunch that not everyone believes another round of QE would be a good thing and then House Speaker Boehner called the possibility of a debt deal “a crapshoot.”
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In my humble opinion, Tuesday’s market action epitomized the current up-and-down, news-driven, worrisome market environment. As I told a colleague, stocks don’t usually go straight down for eight or nine days, then straight up, and then straight back down again. But when you combine thin summer trading with a whole bunch of money being controlled by computers, and as much uncertainty as we’ve seen in a while, well, this is what you get.
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SUMMARY:
- No new news to drive buyers so the fade from the relief rally continues.
- Italy is now the worry of the day in the EU.
- China inflation still coming in hotter than expected.
- Stocks selling as anticipated, good stocks holding up thus far, but that is no reason to be complacent given the sharp selling.
- Alcoa reports great profits but investors are no that impressed.
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Maybe it’s the jet lag talking or perhaps I’ve simply become a little cynical after 25 years in this business. But, yesterday’s action sure felt like a case déjà vu all over again as the fast-money types (who are arguably the only people in the game that react to each and every headline, each and every minute of each and every day) appeared to open up the playbook on sovereign debt crises again and make the prescribed trades.
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SUMMARY:
- Weak, very weak, jobs data disappoints investors.
- Stocks sell, but they do good work in minimizing the damage.
- Unemployment rate rises even as jobs pool falls, underscoring the weakness in jobs market.
- More testing is likely but market shows surprising strength in the face of bad news, suggesting a test versus a selloff.
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The bears clearly had an opportunity on Friday. For starters, the market had run up nearly +6.7% in a matter of eight trading days and as such, the major indices were back to within spitting distance of their April 29th highs. Next, the joyride to upside had created an overbought condition and there was resistance looming. Then there was the fact that it was a summer Friday, which tends to lead to traders taking profits and heading home early. Oh, and lest we forget, the quarterly earnings parade is close at hand, giving anyone on the fence a reason to stay there. And finally there was the jobs report, which saw adjectives such as “terrible,” “disastrous,” and “shocking” used to describe the biggest miss in quite some time.
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SUMMARY:
- ADP provides a reason for stock market to extend rally, building in expectations and higher prices for a stronger Friday jobs report.
- Jobless claims lower but still well above 400K for the thirteenth week.
- Same Store Sales again top expectations. Lower gasoline does help.
- SP500, NASDAQ break through February peak, DJ20 transports at a new high. A clear case of the market running farther than anyone expected.
- Many leadership stocks show gaps and reversals, gaps to doji on Thursday. Are they foreshadowing a desire to sell the news Friday?
- Chicago PMI, Greek vote, ISM, ADP, rumor of budget deal all helped spur the rally. Outside of a blockbuster jobs report, and even if it is, is there room for more upside right now?
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SUMMARY:
- No big gains, but no backing down from resistance either.
- NASDAQ, SP600 put in seventh upside session as indices overcome Chinese rate hikes, more layoffs.
- Challenger jobs cut survey posts an increase.
- ISM Services expands but less than expected and at a slower pace.
- Obama: If you don’t raise the debt ceiling, watch out for a second recession. More politics designed to get their way versus tackling our problems.
- The test is not really a test as the market continues upside but still faces resistance.
- Some quiet before the jobs report . . . and earnings.
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SUMMARY:
- Indices go nowhere, but that in itself is a degree of victory for the upside.
- Overall market may have been flat, but leadership enjoyed a sixth day of rallying.
- Moody’s downgrades Portugal four notches in one move. A foreshadowing of the US’ treatment?
- Chinese banks receive a warning from Moody’s.
- Factory Orders rebound, not as much as expected, but revisions help.
- 2M jobs created? Let me tell you about that . . .
- Avoiding a selloff is a good initial step, but market is still in the Missouri mindset.
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With Greece officials passing two very important measures last week and both the Chicago PMI and the ISM Manufacturing indices coming in well above expectations, it appears that the driving forces behind the recent correction in the stock market may be dissipating. First, since Greece is now VERY likely to get the money it needs to avoid a default this month, it appears that traders can put the issue of credit contagion off to the side – for a short while anyway.
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SUMMARY:
- Market surges for fifth straight session, providing the fireworks for the Fourth of July
- Modest gains early until ISM supercharges the session, and sellers dared not enter the fray.
- Investors realize that few earnings warnings mean a solid earnings season, and they spend the week playing catch-up.
- SP500 rallies to test the February peak, SOX testing its range.
- Bonds sell and gold fades, both expected if the economy strengthens, but why is the dollar still selling if times are getting better?
- ISM posts a solid rebound on the headline, but key components are still very disconcerting. China’s PMI declined again.
- Michigan Sentiment declines more than expected.
- Cyclical stocks making the best moves.
- Building gains ahead of earnings that are, as of this week, expected to rise again.
- Indices at a key point: test the rally and continue or fail at this resistance?
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SUMMARY:
- Rally makes it four straight.
- End of QE2, end of Q2, Chicago PMI all credited with the rally, but unlike some of the conclusions drawn, we don’t think it is a new breakout.
- Jobless claims put in an even dozen over 400K.
- Chicago PMI jumps over 60, a nice turn in the data.
- Still playing this as a long in the tooth relief rally as Q2 ends
- Stocks can still rally Friday but expect some afternoon selling if they do ahead of July 4 holiday.
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